González Rodríguez, Francisco 1944–
Francisco González Rodríguez
Chief executive officer, Banco Bilbao Vizcaya Argentaria
Born: October 19, 1944, in Chantada, Lugo, Spain.
Education: Universidad Complutense de Madrid, BA, 1970.
Family: Married; children: two.
Career: FG Inversiones Bursátiles, 1987–1996, president; Argentaria, 1996–1999, chief executive officer; Banco Bilbao Vizcaya Argentaria, 2000–, chief executive officer.
Address: Banco Bilbao Vizcaya Argentaria, Gran Via, 1, 48001 Bilbao, Vizcaya, Spain; http://www.bbva.es.
■ After successful careers in the computer industry and as a stockbroker, Francisco González Rodríguez became one of Spain's most powerful banking executives. He served as chief executive officer (CEO) of the Argentaria group from 1996 to 1999. During that time he led the final phase of privatization of the formerly government-owned banking group. After Argentaria merged with the Banco Bilbao Vizcaya (BBV) in 1999, he became CEO of the newly created Banco Bilbao Vizcaya Argentaria (BBVA), one of Spain's largest banks. Notable among González's achievements were BBVA's expansion into Latin America and the diffusing of a major scandal inherited from BBV. González enjoyed a reputation as a no-nonsense workaholic who also believed in delegating authority.
González was born in 1944 in Chantada, Lugo, in the remote northwestern region of Galicia, Spain. After moving to Madrid, González obtained a degree in economics from the Universidad Complutense de Madrid in 1970. Upon graduating, he began his professional career in the computer industry. His experience as a computer programmer would lead him to be at the forefront of utilizing the latest technology in the
banking industry later in his career. After working for several computer companies, however, González found that he was more interested in the financial industry.
González left the computer industry to become a stockbroker in 1983. In just four years he was successful enough in his new career to have saved sufficient capital to start his own business in 1987. In the late 1980s he began his own brokerage firm, FG Inversiones Bursátiles. He took advantage of the many market reforms taking place in Spain at the time to build his company into the largest independent brokerage in the country. In 1996 González greatly increased his personal wealth by selling his firm to Merrill Lynch for $30 million.
Not only did González earn great profits, he also made important connections in the world of politics. In particular, he established contacts with the center-right political party known as the Partido Popular (PP). González organized a series of seminars to promote FG Inversiones, and one of the invited speakers was the PP congressman Rodrigo Rato. González and Rato became good friends, a relationship that served González well when the PP won the 1996 elections.
FROM STOCKBROKER TO BANK CHAIRMAN
After selling his business, González remained as a senior advisor at Merrill Lynch while he developed his plans for the future. These plans took on a new twist when in May 1996 the new PP government in Spain appointed him as the chairman of the Argentaria banking group. González went from having 130 employees at the brokerage firm he founded to being at the helm of a company with some 16,000 workers. The government selected González to complete the privatization of Argentaria, which had been created in 1991 in a merger of government-controlled banks in Spain. By 1996, 25 percent of Argentaria was still government owned.
Between 1996 and 1999 González guided Argentaria as it became a unified, fully privatized business. He spent three years putting the company in order by refinancing its expensive assets, changing its management structure, merging its three main units, and cutting jobs. While González succeeded in these endeavors, the cost was a sharp decline in profits in his first year on the job at Argentaria.
One of González's tasks as CEO at Argentaria was to make the banking group more efficient. Specifically, he had to reduce the number of employees and eliminate what he called "superfluous luxury." While cutting jobs was a difficult process, González argued that he had no alternative and that many redundant positions should have been eliminated when the group was created. It was now up to him to streamline the company before the government sold its remaining 25-percent stake. To this end, in May 1997 he cut 2,100 jobs at the Banco Exterior, one of the key components of the Argentaria group.
González also pointed to the company's headquarters as overly ostentatious. Argentaria's offices were located in a magnificent nineteenth-century building in Madrid and possessed an extensive art collection. The new CEO saw these luxuries as unnecessary, telling the Financial Times that "banks have to make money. They don't need pictures and piles of pretty brick and marble" (May 9, 1997).
MERGER WITH BBV
González's career took yet another twist in 1999, when Argentaria merged with the BBV. He had been exploring various possibilities for mergers and acquisitions. When the Banco Santander and the Banco Central Hispano, two of Spain's largest banks, merged, González felt that it was time to act so that Argentaria would not be left behind. With the merger, González became cochairman of the newly created BBVA, sharing duties with Emilio Ybarra, who had been CEO at BBV. One of his most significant early challenges at BBVA was that he was considered an outsider. BBV had a long history in Spain's self-governing Basque region and had traditionally been run by a group of Basque elite simply known as "the families." After the merger, the offices of BBVA were located in Bilbao, home to BBV, rather than in Madrid, where Argentaria had been based.
In 2000 González faced a serious crisis. It took four months and an internal power struggle for him to learn the details of one of the biggest scandals in European banking history. The alleged activities, which began at BBV before the merger with González's Argentaria, included secret slush funds, money laundering, and bribery. Upon learning of these secret accounts in September 2000, he told BusinessWeek that "I felt shocked, worried, and betrayed" (May 27, 2002).
González had good reason to be worried about the allegations. There were secret pension funds in the United States. Other secret offshore accounts were used to trade the company's own shares. There were shady political contributions to the presidential campaign of Hugo Chávez in Venezuela. Funds were used to bribe other politicians in Latin America. Additional charges included tax evasion, embezzlement, and money laundering.
While the purported illicit financial activities took place before González joined BBVA, it was up to him to restore the reputation of the bank. He had to deal with both public criticism and also satisfy authorities that BBVA was cleaning up its practices. The scandal led to many resignations at the bank and severely hurt morale at the company. González himself had to appear before a judge as a witness in the scandal, although he was not being investigated personally. In December 2000 he closed the secret accounts, transferred them to the bank's balance sheet, paid taxes on the funds, and reported everything to the Bank of Spain. In 2001 many of BBVA's top executives resigned due to alleged involvement in the scandal. Among them was cochairman Ybarra, whose resignation left González completely in charge of BBVA. Overall, 27 people were indicted in connection with the secret accounts.
AN EMPHASIS ON CORPORATE GOVERNANCE
While the BBVA scandal may have represented a low point in González's career, he used the crisis to overhaul the bank and its corporate governance, making his company more transparent in order to win back the trust that was lost among customers and investors. He studied the best codes of corporate governance used by other companies. BBVA then adopted the most rigorous systems, while adding its own elements. González broke with the tradition of packing the bank's board of directors with cronies by appointing more neutral outsiders. He promised to select board members based on their knowledge, responsibility, and experience rather than on personal connections. He also promised to publish the salaries of BBVA's top executives, a rarity in continental Europe. "BBVA will have the most advanced code of governance and standard of transparency. Society is expecting it," González told BusinessWeek (May 27, 2002).
LATIN AMERICAN EXPANSION
González and BBVA participated in a wave of Spanish investment in Latin America in the 1990s. Banks expanded in Latin America due to their overcrowded domestic markets and restrictions on cross-border bank consolidation in Europe. Cheap assets and the promise of great profits lured Spanish bankers to the region, and at first they enjoyed much success. As much as half of BBVA's profits during the 1990s derived from its Latin American holdings.
Along with many other corporations that invested in Argentina, however, BBVA was hurt by that country's severe economic crisis in 2002. Nevertheless, González promised to remain loyal to the region despite the uneven results of his company's activities in the region. He did not want to give up on Latin America because of the success BBVA experienced in countries other than Argentina. In 2001, for example, 17 percent of the bank's profits came from its operations in Mexico, and in 2004 BBVA purchased the remaining 40 percent of Mexico's Bancomer that it did not already own. Part of the appeal of Mexico for González was the country's proximity to the United States. One profitable growth area was the remittance of funds from Mexican migrants living in the United States. The Argentine crisis was a good learning experience for BBVA. Jordi Canals, a business-school dean in Barcelona, told the Financial Times, "They are learning how to manage banks through a crisis" (November 18, 2002).
A PROPONENT OF TECHNOLOGY
González was a strong proponent of expanding the use of technological developments in the banking industry, a result of his earlier career as a computer programmer. He believed that by adopting state-of-the-art technology, his company could gain an advantage over its competitors. He pointed to electronic payment systems that had made checks virtually obsolete in Spain. The use of such technology reduced costs and freed up time, leading González to claim that BBVA was one of the most efficient banks in the world. In addition to efficiency, the use of technology to track and record customer activity allowed BBVA to better understand and serve clients. González maintained that technology aided BBVA in treating its customers like real human beings.
González also sought to expand the use of telephone and Internet banking. He compared the situation of the banking industry in the 21st century to that of the Wells Fargo Company in the 19th century. Wells Fargo had to adapt to the appearance of railroads after having relied upon stagecoaches for so long. González equated the brick-and-mortar bank branches with the old stagecoaches and the new modes of remote access with the railroads.
A WORKAHOLIC AND TEAM PLAYER
González had a reputation as being something of a workaholic. While he enjoyed playing golf on the weekends, he spent little time away from the office. Neither a smoker nor a drinker, he worked out vigorously at the gym for an hour everyday. González believed in delegating authority. Upon becoming CEO at Argentaria in 1996, he created the new post of managing director so that he would not be overwhelmed by an enormous workload. González told the Financial Times that "the whole thing is having a good team. I don't believe in the style of a chairman having to do everything. I prefer people to think for themselves" (October 15, 1996).
See also entry on Banco Bilbao Vizcaya Argentaria S.A. in International Directory of Company Histories.
sources for further information
Burns, Tom, "Argentaria Makes Job of Redundancies," Financial Times, May 9, 1997.
Crawford, Leslie, "Latin Lessons Have Left Little Room for Growth," Financial Times, November, 18, 2002.
"Holding the Bag at BBVA," BusinessWeek, May, 27, 2002.
White, David, "The Third Time Around," Financial Times, October, 15, 1996.